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Is there any centralized cryptocurrency? Is cryptocurrency a Bitcoin oriented concept only? From what i read almost all of the cryptocurrencies are derivatives of Bitcoin.

  • I like this question because there is a strong possibility that on the long run a centralised cryptocurrency will out-compete a decentralised one on transaction fees / energy cost. Yes, I know decentralised currencies will always hold a special place in the heart of the libertarian early adopters, but I wouldn't hold my breath the wider quadrillion-transactions-per-year community will tout freedom over speed or cost effectiveness. – LateralFractal Oct 16 '13 at 10:41
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Cryptography-based currencies predate Bitcoin by decades. The most well-known is the work of David Chaum on blind signatures, described in some papers from around 1985. The most accessible description of his and other methods is actually this document from 1996.

In 1990 Chaum went on to found a company, called DigiCash, to offer such a currency.

What they offered had a lot going for it - you could store money as data on your computer, and you could transfer it anonymously. However, what it lacked was a decentralized transaction synchronization mechanism - synchronization was done on the company's central servers. Because of this, it did not achieve the support Bitcoin did, and the company went bankrupt in 1998.

A more modern platform is Open Transaction which is inspired by Chaum's ideas but offers much more functionality.

So the reason you don't hear about centralized crypto-currencies is not because they don't exist, but because they're mostly pointless. Only with the advent of decentralized transaction synchronization in Bitcoin and its clones we saw growth in this space beyond just academia.

  • > but because they're mostly pointless. Curious about this assertion? – pratnala Nov 14 '16 at 3:36
  • @pratnala: Cryptocurrencies such as Bitcoin gain their features and advantages from being decentralized. As long as it's centralized, there's very little to be gained from being cryptographic. If you can't use your money independently and you need the services of a central issuer (which can shut down or offer poor service, and is free to charge fees and restrict), what difference does it make if you sign a cryptographic message or log in to the issuer's servers? – Meni Rosenfeld Nov 14 '16 at 8:44
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I think you are correct that almost all of the cryptocurrencies are derivatives of Bitcoin. From that fact it would follow that they would all be decentralized.

That being said, there are centralized aspects of cryptocurrencies, including Bitcoin. For example, online wallets, exchanges and mining pools are all centralized.

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As others have pointed out, crypto-currencies are not a new thing and have been around for decades.

One currency that might meet your criteria is litecoin.

Litecoin is still an opensource, community driven currency, it's not quite a "centralized" currency.

That being said, the company developing Litecoin is taking a more hands on approach and trying to offer a bit more support for the currency. Whether that's a good or bad thing, only time will tell.

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It depends on the nature of the cryptocurrency as to whether such a direction is advisable. If the nature of the cryptocurrency is to be equity and production based in support of debt and consumption based national currencies, then "yes" a cryptocurrency is certainly optional. The current regulatory environment is allowing the IRS to ask for all of the Bitcoin depositors and subject them to taxes through Coinbase. It is only a matter of time until this precedent is applied to banking regulators seeking to safeguard central banks. National governments such as the Bank of England and the Bank of the People's Republic of China are already engaged in the creation of their own cryptocurrency efforts that are still debt and consumption-based. Based on research, depositors still prefer centralized banking relationships over decentralized banking. People still want to know who is responsible for the safeguarding of their hard-earned money.

  • -1 most of this answer appears at most to be tenuously related to the question. Are you answering to another answer instead? Please focus on answering the question, as the order of answers on Stackexchange is not necessarily by posting time. – Murch Jan 3 '17 at 10:51

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